Pressure mounts on Karnataka to reduce Value-Added Tax on petrol, diesel

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The Central government last week reduced the excise duty on petrol and diesel by Rs 2 per litre and had asked the state governments to give more relief to customers by slashing the Value-Added Tax.

Few were as surprised as the Uttarakhand finance minister on Monday, when chief minister Trivendra Singh Rawat's office tweeted about an impending cut in petro taxes to provide the public with some much-needed relief.Finance minister Prakash Pant shot down any such possibility minutes later, clarifying that there was no question of taking a step like this when the government had reduced value-added tax (VAT) and cess on petrol and diesel only recently. Almost half the current price of petrol and diesel is attributable to taxes imposed by the Central and the state government.

"People are struggling hard due to the oppressive taxation on petrol and diesel which has led to prices of petrol to hover around Rs 70.96 and diesel at Rs 60.04 (in Chennai)", he said.

Last week, the Centre government had cut excise duty on petrol and diesel by Rs. 2 per litre. "We expect reduction of at least Rs 3 to 4 per litre in petrol prices as the difference in rates between the two states is around Rs 7 per litre for petrol".

Mungantiwar admitted that Tuesday's decision would lead to a revenue loss of Rs 2,015 crore.


The effective price of petrol in Gujarat from midnight on Tuesday will be Rs 67.53 per litre and that of dieselRs60.77perlitre, the Chief Minister said. "You looted people over not just last three-and-a-half years but in the last 22 years by not cutting taxes". He added the decision will cause an annual revenue loss of Rs 2,000 crore to the state exchequer. The VAT component varies across cities and the percentage is decided by individual state governments. This means the cumulative rate of current taxes (VAT+excise) amounts to a whopping 71 percent on diesel and 99 percent on petrol which was around a mere 15 percent at the start of 2014.

"Hence, I insist this (AIAMDK) government to follow the actions initiated by Gujarat and Maharashtra and transfer the benefit to people by reducing the taxes", Stalin said.

In 2016-17, Maharashtra consumed 426.80 crore litres of petrol and 976.46 crore litres of diesel.

Maharashtra continues to have the highest tax structure for petrol compared to neighbouring states.

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